Fintech Roadmaps

Carlos Ponce (00:00):

Good morning everyone. Welcome to another episode of Tech Leaders Unplugged. And today we are getting unplugged once again, and this time it is with our guest, John Bentley, who is the CPO and Co-founder of 10XTS. How you doing? John? Welcome to the show. Thanks for being here.

John Bentley II (00:33):

Yeah, thanks for having me.

Carlos Ponce (00:34):

Absolutely. It's our absolutely. It's our pleasure, John. So we look forward to this conversation because we're going to be talking about FinTech roadmaps, which is something that is, that is near very near and dear to my heart. 'cause You know, I've been, I've, I've, I've been in, in FinTech for, for a couple of years in the past. And but anyway, this shows not about me, it's about you. So let's start with you, John. Tell us a little bit about you and your journey, your background, how you ended up here, and again, welcome to the show.

John Bentley II (01:08):

Yeah, so I've I'm actually a lifelong programmer. I learned to program at 10 years old from my dad, who was an engineer for the telephone company and started using computers to help automate his job. So we had the old TRS 80 color computer that hooked to a TV, and he started learning to code. And he was very much, the engineer would go through the book, and I very much more of a hacker by nature would simply glean what he learned, scan through the book, and then try out a bunch of stuff on my own. So that became a lifelong I'd say love hate relationship with coding. And I've been coding ever since. I, I went to school to study computer science, and while I was there, I worked at IBM and network management and had a chance to actually work in product development and put a couple of product releases into the into the marketplace. Back then I was studying operating systems, but I was working on user interfaces, so it gave me an appreciation for what we now call full stack. Early in my career, I departed. I departed from a couple of different product companies into consulting hoping to make, make a name for myself. And mainly I made a bunch of frequent flyer miles living out of town, and eventually ended up settling back into Sprint to more of an enterprise software development role. So, through that, I gained a lot of experience across from product and internal IT systems. And Sprint actually got quite an education to enterprise it, moving from more engineering systems to finance systems and business intelligence, and then even into some infrastructure support. From there I took a detour during the great outsourcing of the early two thousands and went and worked in a family business in healthcare and actually managed the business aspects of things, and then found myself in managed services. Then I taught some high school, because I guess I have one of the worst cases of adult DD. And then got back into software because as much as I enjoyed teaching the kids, I had my own kids to feed and clothe and put through college. And unfortunately, education just wasn't going to do it for me. So I got back into back into development actually at a a FinTech firm that was doing lending for small businesses, alternative finance, then jumped into some market research. But after having worked in a family business in my own business, I just couldn't shake the bug. Got in, got to introduce the founder institute. Tried a couple of ideas out that didn't work. And then the guy that the organized Founder Institute asked me if I'd be interested in learning about blockchain and doing something with real world assets, hopefully helping it make it easier for startups to get funded. And that was about six, seven years ago. And I've been on that journey ever since. Learning about blockchain reveling and being a heretic in both crypto or regulated finance and really proving that grit is the key thing in entrepreneurship.

Carlos Ponce (04:26):

That's, that's great. John, thank you for sharing your, your journey and your story. Now, let's tell me, tell us a little bit about 10XTS, you know, what is your value prop? Well, tell us a little bit about the journey in building the company and such.

John Bentley II (04:44):

Yeah, so one of the hardest thing we, there's a lot of talk about dark pools of capital and these assets that that you, that most people can't invest in. And the truth is, is making something that a non-accredited investor can get. And that's most of us that don't have a lot of money in the bank to qualify to where they feel it's safe for you to lose your shirt on a bad startup idea, or, or, or likewise. They it's really hard to make things safe for people to invest in. And a lot of that's just economies of scale. So what we really started looking at is blockchain as a way of kind of democratizing the investment, but trying to bring transparency in the safety that's required for you to risk your money and scale it out. So really the key aspect I think we start bringing is what we call secondary market liquidity, which is something it took me about two years to get to understand, let alone pronounce the phrase. And so really what it comes down to is, is that you go and you were buying into like a, a hotel fund. So you own like a fund with five hotels. You know, you're going to like be able to get out of that in like 10 years. Well, if four or five years down the way you need that money, like maybe your kid gets into you know, MIT or Stanford or someplace fancy and wants to go to graduate school and you didn't have that money set aside for it. So you want to pull that, pull money out this investment to help them go there. Selling that is really difficult and you don't really get a good value for it because it's hard to sell. So by making things easier to sell in approving that value, we can get gain initial market share and start getting the momentum going, and then start to also further fractionalize it so we can sell it to more people. Another area we looked at, which is one that because it's government is something we're still pursuing, but takes a while. It's something simple like local bonds right now, wherever you live, your municipality is selling bonds. Your county is selling bonds, but more than likely you have no way of buying those bonds. They get sold out into Wall Street, and they do that because when you're trying to raise $30, $50 selling bonds, a hundred bucks a pop out of the office of the county clerk just isn't going to get you there. So we were looking at how do we take a portion of that and again, make it efficient to sell. So people that live in the county and then other individual investors could buy in that, and these bonds are like the greatest thing in the world. 'cause They're paying five or 6% and it's guaranteed by the government. So like when Detroit went belly up we all pitched in to bail that out. So the bond holders were fine. And that's the kind of access to investment we like to give to the average investor. And that's, that's where we're looking to leverage the blockchain technology. Now, what's interesting with 10XTS is that we've been a little bit of a pariah, and it's been one of the challenges in pursuing this line is that in regulated finance we're disruptive and looking using blockchain to help decentralize some of the investments and really disrupt some of the value prop that they have, which is really centralizing assets and trading. But on the other side, when you go into crypto, because they are so anti-regulation, doing anything in the regulated traditional markets makes you kind of a heretic. So I adopted the name of, of a crypto heretic that have enjoyed going to a conference and telling people I work in blockchain, but oh, no crypto, because I don't believe in its value proposition as much as other things. And it's led to some quite interesting conversations. So that's, that's the line we've been pursuing. Currently we've had several forays in the marketplace with pilot projects, and there just hasn't been a lot of infrastructure or partner companies to make it make a go with it. With regulated finance. We're currently looking at some new opportunities that may yell that. And so it, it's been very interesting having to it's actually made the product a lot better having to shift around looking at different finance opportunities and how do we actually build and capture that so that we don't have to rebuild a product every time there's a pivot. So instead we build a more and more flexible financial system and record keeping system.

Carlos Ponce (09:39):

I see, as I'm listening to you, I really look for forward to the rest of the conversation because there's so much that I personally would like to know more about. I mean, I've say I was telling you at the beginning when we were off the air that I had some, you know some, some I had when, when I, when I said that I was, had been in FinTech, it meant I, what I was referring to is that I had worked in that space in other areas, but I've also have a couple wallets, you know, crypto and all, and all that, you know, at a very, at a very at the layman's level, for example. I'm not, I'm not an expert, so just mostly as an investor, that kind of thing. So the question, well, I have, I do have a bunch of questions coming for you, by the way. But before we go there, because we are talking about well, today's topic is the roadmaps, you know, what's ahead in FinTech. So let's touch a little bit about on what's coming. So in regards to the future of FinTech and the roadmaps let's start with something that I think it's important is governance, risk and compliance, you know, solutions for electronic records. What are the key challenges faced by companies in this space? Can you tell us a little bit about that, please?

John Bentley II (11:06):

Yeah, I mean, it's so I, I think FTX actually shows us where you don't address governor risk compliance. That it's a, it's a huge issue. You know, that, I mean, a lot of that was because they did not have internal controls ways of managing how money was used. And, and I mean, they like basic accounting. So it's, it's much more agree. They, they shouldn't have been allowed to run a local donut shop, let alone a finance company, the way they kept records and things. But, you know, the, the real thing gets to be, so let's say you have a blockchain wallet, and in it you have a token, and that token represents ownership equity in a company. But what happens if you lose the wallet? You know, I, I don't, I actually, I think a lot of the things around blockchain are real interesting the way they're talked about. But I believe wallet is one of the most accurate pieces of technology, because I don't keep all of my wealth directly in my wallet. You know, when my paycheck comes out, I don't put all the cash in my wallet. What I do have in my wallet is a piece of plastic that ties to my, my, my paycheck so that I can go spend it. So, you know, we don't really try to keep all our wealth there. You know, so what happens with companies that are trying to, to save to reach investment and sell these type of equities and, and debts and things, is you need off, you need off chain records. So even if you're using Ethereum or one of the other networks like Avalanche to store and save things, you need a record someplace in the United States, it's called a transfer agent and 10 x to, yes, we have a transfer agent called Ledger Lab. We formed to help with this. And in the UK and parts of Europe, it's called a Registrar, which I like as a more general firm. But like whenever you if you own like a really small business I used to have an actual physical paper stock certificate for a family business I am part of. But that certificate, while it's a representation and claim of ownership, it is not the official record. The official record is somewhere in Ledger, whether it be paper or an electronic record used that may not be like a DLT, but just used as a store of ledger, like a spreadsheet or a database for family businesses. It's usually a spreadsheet kept in a law firm's computer, but that is the set of things of who owns this, and then a log of what the transactions are, and that's what transfer agents and registrars do, and they know how to keep up with that. So those records, the records of the board that issues the equity or debt and all those actions that happen, those are the things that are actually what you own inform the legal basis. So whenever you have you know, if you had a hundred of whatever coin, if you had a hundred of Widget Co, and that was a token in your Ethereum wallet, what that a hundred of Widget Co is, would have to tie back to those legal records and evidence. And this is something that with blockchain is getting the blockchain space in FinTech is really getting more recognized, is that despite having alternative assets, you need to know what you own. And you need to be able to evidence that for vast scenarios. So where the company collapses or you lose access to your wallet and things like that. That's why there have been companies around the FinTech space that have started doing wallet custody and things like that because, you know, I don't bless you, but, you know, the scariest thing about a crypto wallet is if I lose this this key, this wallet address and this secret then I have access to nothing. There's actually a very funny scene in the show Silicon Valley where the guy was, had a bunch of people looking through a trash pile because the somebody was cleaning the house had actually thrown away their hardware wallet. And so they had like, you know, a billion dollars on this flash drive someplace. So that's where custody and things started to come in. I think the, the big space we're seeing is we're seeing more of an interest in traditional finance in in, in crypto. That's where we're seeing a lot of calls to the Bitcoin ETFs and things. And that's because there was a class of investors that want to hedge their risk by offsetting that with crypto and the main street the, the ma the kind of mainstream finance folks in the institutions don't want to lose that capital. So it is not, they really want to be in Bitcoin. It's that if someone's going to put 10% of their portfolio in crypto and that's 10% of a hundred million dollars, that's a lot of money. They lose the chance to make fees on. So they're expanding into that. We continue to see with FinTech the interest of things like C BDCs, which is programmable money. And if you have any libertarian leanings or understanding of how, what kind of control that puts over your finances, it gets a little scary. It's like you know, one day going to the grocery store and you can't spend that money on snacks. You have to only spend it on produce, which is probably better for you, but it's your choice. So, right, right., you know, those are the kind of things they start throwing in there. So those, those create some of the concerns. In the United States, we have a lot of challenges with it because the regulatory authorities have made it essentially illegal for any regulated institution to do business on public blockchains. Even the holding of Bitcoin is kind of interesting how they'll thread that needle because Bitcoin nodes can, can, and Ethereum nodes have been able to be don't have their the people that operate the nodes vetted and identify through like a KYC process, then it's assumed that bad actors could be operating nodes and they're on, I can't remember the name of the list off the top of my head, but the list of people you're not allowed to bank with. And so those kind of regulations and things really make it hard for regulated entities to do business on them. So these institutions are really hampered and we're not, you know, the SEC has really taken a stance of try something out and if you're wrong, we'll find you and shut you down. And I don't know about you, but I don't like the idea of starting something and then finding out I wasn't allowed to do it a year later after I got it up and running. Kind of need to know that before I commit to it. And that's what a real chill effect on the market as well. You know, I think. The other thing is, is that I think there's, there, there, there's still a lot of interest in it, but I think the big thing is going to be somehow, you know, crowdfunding is taken off a little bit in FinTech as a FinTech source, but there's really no secondary markets. The few blockchain things that have tried to do, like overstocks on T Zero and things like that, there's just no secondary market and they're very small pools of capital. So there's just not enough, there's no network effect going. So if we really want to see Web3 take off, we're going to have to unlock things from smaller network and players. And these very small, like, there, it almost reminds me of bulletin board systems. Back when we used to dial up computers before we had the internet, things like phyto net started unlocking value, but it was really a general purpose internet of information sharing that, that we gave white access to that, let that take off. We're going to have to see something in the, in the finance where identity, like, you know, your, your verified identity as portable and you can actually take your assets to different places and trade them without locking them into one market or the other, but with still some control and management of the wallet, so you don't have the risk of losing everything and finding those balances.

Carlos Ponce (19:37):

Absolutely. Absolutely. So I'd like to go back a little bit to the, the, the roadmap part. 'cause Actually that's sort of what we're, we're talking about today is the roadmaps, roadmaps in FinTech. So how do you prioritize feature development in your product roadmap, for example, and what factors play a crucial role in your decision making process?

John Bentley II (20:04):

Yeah, so it, it's really interesting is when we, and, and I'll say what's I find interesting about this is, is that there's some things you prioritize for market, and honestly, some things you have to prioritize for demo. So one of the things that we really like to have in the demo is like a candlestick chart or these kind of like moving charts and things like that. And as a, as a demo feature, that's very important to show kind of future state. But as a product feature, a graph is really uninteresting whenever you don't have any volume going on, you know, so when you're doing like a primary offering for a new asset or until you really get market volume going, there's no data. So it, it's really uninteresting. It's like watching a graph of a ping and the response times if it's always zero, you know, or there's no pings going out. I mean, it's just, it's just an empty graph. So we start looking for us, we started looking at what are the most common things you want to know and prioritizing the features around things like, you know, I need to know my balance. I need to know what transactions have occurred. I need to understand what valuation changes have happened so I understand my holdings. So we really kind of prioritize first and foremost, read only access. And that's because read only features are actually a lot easier to build. When you start creating update features I I say, you know, an authoring a update feature is, you know, five to 10 times the complexity of a read feature. And so, for example, if I want to see that I've created a stock to record in the system and I want to view those values and the documents with it, accessing all that's real easy. But if I'm going to create it, then I really need something to a sandbox to kind of build it up in and review it. And blockchain, this is even more tricky because whenever you do anything, it's not easy to go fix it. It is it is like a, a good accounting system where every entry that you put in is wrong, has to be offset someplace. There's no just making it right. Right. So as a developer, blockchain is actually the scariest technology I've worked with because I've spent my career going and fixing database errors and data errors and making it look like it should. And blockchain, you just don't do that. You end up doing the, the transactions to fix it. And from an audit standpoint, that could create a lot of noise, which starts to make your system untrustworthy. If your books have a lot of correcting entries, your audit's going to take a lot longer and people aren't going to trust your accounting system. So that's one of the things we have to look at. So, update features, we started looking with pilot projects of how do we get customers to give us data in the right format, and then we capture it that way we can load it and get a lot of verification before we commit it. So that meant that, you know, we started looking at read features, bulk uploads, and then we start at, we start looking at how to pe can we let people go do things safely themselves? And that's where, you know, the roadmap we look at before we do live updates, actually needing to provide a sandbox system where you can model the changes and see what it'll look like before you push it. So it's a lot more like a CICD pipeline. For those in development, you know, that you're actually going to try your code out, test it locally, and then commit it to the flow before you get into it. We find, find ourselves as having to mimic a lot of those same things, and that means that those features are a lot harder. So that's why we look at almost like a white glove service. You know, or like with a train the way, and this is where also you look at doing things like, how do we manage, you know, settlement in a, in a business day, which is industry standard, versus how do we get to real time settlement, right? So real time settlement goes further down which is the goal we want to get to because the risk and cost is higher. So you get a chance to try things out and flush 'em through first, you know, that's, and then it's really who's your user at first? You know, one of our first trials we need, there wasn't going to be a lot of changes to portfolios. So while we had investor access queued up, we really didn't see a reason to bring on a thousand people onto the system at once to all have them look at their balance and generate all the questions of using a new system. And they were going to log in once likely be confused and have no further utility for the system. So we worked a little bit more on the administrative and reporting features because those had the immediate use prospect. So that's that was another interesting thing is, is that what you think is the most common new case in value may not be the things that are valuable upfront. So again, you build 'em to demo, you build 'em, so you have them when they're needed, but you don't put the emphasis on them at first.

Carlos Ponce (25:15):

So there's something that was as, as I was listening to you and, and, and learning how what was behind the, the story of, of a 10XTS there's when we're talking about a roadmap, right? So we have expectations of that at least minimal expectations that something's going to work, right? So everything's going to work out as planned, and everything's going to be fine, but in some occasions, that's not exactly the way it plays out in the end. So we, we need to like adapt. So in that sense, in that context I'd like to ask you, can you share like a specific instance when your team had, when you had to pivot or adapt product strategy based on market feedback or changing industry dynamics, for example?

John Bentley II (26:10):

Yeah, I mean, we're, we're, we are actually the story of Pivot. I don't know if I've had a roadmap last a whole year, let alone six months to date. And except for the early years you know, so we started off, you know, really trying to understand the finance market as a whole. So we started off looking a lot at trading and order taking and, and we had some facilities for that from some open source tools. But as we got into the market, we realized that initial recording and trading was going to take a lot longer to bring in. So we started focusing more on how do we do that core record keeping, which is something we always wanted the information base to understand the asset. So we start, we were working on that. We identified early on that identity was going to be a key aspect to everything, but identity, while it's the foundational piece, it's not the piece that people pay for up front. So it's it's kind of like you know identity's the road. So you're not going to have cars without a road, but no one's going to want invest in road until you have cars. So so, so we have that kind of as a back burner item. The, the biggest thing is, is that we spent about, you know, two years looking at, so what we, what we analyzed at the marketplace was you know, everybody was saying, okay, we're going to, we do regulated securities, we can custody them, which means we can hold them in a regulatory compliant fashion. They were already custodying crypto and things like that. And then and then also people were saying, we're going to enable trading of these assets, but what we found out was, so we were talking to people and asking them, how do you do these things? And more and more the conversations were, or how do you want them done? And so over a couple of years, we had a roadmap that showed how we interacted with the third party custodians, third party markets and things like that. But none of those things really existed, even though they were pushing it. And they were, you know, they're spending big money at conferences promoting this stuff, but none of them were really doing it. We had one that we spent about six months working with on a, on a custody project that's a big custodian. And they wanted, they, they wanted to pay for it pay 'cause they were making easy money off a crypto wallet. And honestly, all they were doing is they didn't have individual wallets for people. They were just throwing it all in one giant wallet, like every traditional institution does and indexing it. So there was really no solutions. So then we were really started driving towards developing a another, our roadmap shifted and we started looking at we started looking at how do you do how do you do settlement and things ourselves? And so we really shifted into that and actually launching, we have a internal record blockchain creating a separate blockchain just for managing those settlement transactions. And that was a major change for us and a major shift that we would not have anticipated. So those kind of things have just, you know, that's just part of the journey. We're a little bit early in the market and we're told the market surely pick up in, in the next year or so. So now we're just trying to figure out ways to keep staying relevant, keeping the conversations for when that happens.

Carlos Ponce (29:40):

John we're, we're about to rip up unfortunately, you know, all good things come to an end, but I wouldn't want to end this today's conversation without asking you one more question. So in your experience, what advice would you give to aspiring product leaders looking to make a significant impact in, in this industry?

John Bentley II (29:59):

I mean, yeah, I would say first have a good conversation about what the product is. The product is not the code and it's not the page. You see, the product is the full experience and you get buy-in on that. The product is how you onboard the customer, the documentation you provide, and know who's responsible for those things, right? Don't expect your programmers to record good videos on how to use the system. They are, believe it or not, they're never experts in how the system's actually used. They're experts in getting, making the test case work. Some may pick it up, but that's not a thing. And really understand that you're con constantly balancing between sales and the sales and market research people and the actual builders and figuring out what actually needs to be done and how it is to be done. So building that, you know, building that collaborative style of working between them and bringing everybody together and facing reality is really important. The other thing that reason I got into the product role from CTO is that there's a real tendency early on to overly customize for a few customers and you start getting in the edge of custom software. So having a real discipline on what it is to make a product that can do something five, 10, a a hundred, a thousand times for people is really what you have to focus on in, in that product discipline. And that actually is true whether I think you're building a product or working in enterprise it. So there, there's a great book on product management I read years ago it's called the Product Management Handbook. And it's something I recommend is just a primer on how to go about it.

Carlos Ponce (31:45):

Excellent. Well, John, it's been a pleasure having you here on the show today. And especially for per people like me who are sort of new to the FinTech space because, you know, you're years light years ahead of, of people like me, but I appreciate your shedding so much light on today's topic and, and which is of great interest to a lot of folks out there. And before we go, I'd like to just make a quick announcement of what's coming. So next week right here on Tech Leaders Unplugged, we're going to be speaking with Steve Barriault, the, the Vice President of Field Engineering of IOT at Canonical. And the topic is going to be growth through Secure SaaS solutions in the devices world. So please join us next week right here on Tech Leaders Unplugged at 9:30 AM Pacific. And John, it's been a pleasure having you again, please.

John Bentley II (32:50):

Thank you.

Carlos Ponce (32:52):

Yes, and hope, hopefully we'll see you next. We'll see you sometime soon, again in the future, right here on Tech Leaders Unplugged. Thank you so much. Have a great one. Please, John, stay as, stay with us as we go over the air and see you next time folks. Right here next week on Tech Leaders Unplugged.